Mortgage rates rose for the seventh straight week according to Freddie Mac This Week in Real Estate. “While springtime is typically the busiest homebuying season, the upswing in rates has caused some volatility in demand,” says Sam Khater, Freddie Mac’s chief economist. Despite the rising rates the National Association of Realtors reported the median sales price in March was the highest median price ever recorded. Below are a few newsworthy events from the third week of April that influence our business:
Permits And Starts Sit At 16-Year Highs. Despite the oft-cited hurdles, housing production continued to strengthen in March. Permits for residential construction were issued at seasonally adjusted annual rates that surpassed 1,800 for the fourth consecutive month and housing starts were the highest for any month since June 2006. YTD starts total 394,800 with single family starts accounting for 265,300 and multifamily starts for 124,700. These are year-over-year increases of 10.3 percent, 3.9 percent, and 26.3 percent, respectively. The construction delays resulting from supply chain and labor issues frequently cited by the National Association of Home Builders (NAHB) may be manifesting itself in the number of homes completed. Those numbers were down 4.5 percent from February and 13.0 percent from the prior March to a rate of 1,303 million units. Completions of single-family homes fell 6.4 percent and 3.3 percent, respectively. There were 291,700 homes finished during the first three months of this year, 5.5 percent fewer than during the same timeframe. Single-family completions lag by 0.8 percent and multi-family by 20.3 percent.
The Price Of A Home Sold In March Set A Record, As Inventory Dwindled And Sales Fell. Sales of existing homes dropped 2.7% in March to a seasonally adjusted, annualized rate of 5.77 million units, according to the National Association of Realtors. March sales were 4.5% lower than the same period in 2021. The median price of an existing home sold in March was $375,300, an increase of 15% from March 2021. That’s the highest median price ever recorded by the Realtors. Prices continue to rise because the supply of homes for sale is still incredibly low amid strong demand from millennials. At the end of March there were 950,000 homes for sale, a decrease of 9.5% year over year. Homes that are for sale are moving quickly with average days on the market just 17 days, down from 18 days a year ago.
Fewer Prospective Buyers Are Actively Searching For A Home. A growing segment of prospective home buyers aren’t moving past the planning stage. At its peak in mid-2021, 61% were actively trying to find a home to buy. Now, the share is back to pre-pandemic levels, at 46%. This is clear evidence that higher mortgage rates and double-digit growth in home prices are discouraging a growing share of buyers from engaging in the purchase process. Fewer buyers in every region are actively searching for a home. From peak to now, the share dropped in the Northeast (72% to 50%), Midwest (51% to 40%), South (58% to 48%), and West (72% to 46%). Of the buyers who are actively searching for a home to buy, most are spending 3+ months looking. In the first quarter of 2022, 67% of active buyers had spent upwards of 3 months searching for a home. Before the pandemic (between the first quarters of 2018 and 2020), fewer than 60% of active buyers shopped for a home for 3+ months.
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